The marketing mix principles
(also known as the 4 P’s.) are
used by business as tools to
assist them in pursuing their
The price is the amount a customer
pays for the product.
It is determined by a number of factors
including market share, competition,
material costs, product identity and the
customer's perceived value of the
The business may increase or
decrease the price of product if other
stores have the same product.
In retail, price regularly quoted to
customers before applying discounts.
List prices are usually the prices printed
on dealer lists, invoices, price tags,
catalogs, or dealer purchase orders.
Discounts & Allowances
Discounting is a financial mechanism
in which a debtor obtains the right to
delay payments to a creditor, for a
defined period of time, in exchange for
a charge or fee
Discounts and allowances are
reductions to a basic price of goods or
Discount sales in shopping malls
Off season sales
Closing down sales
Exchange offers – mobiles, cookers,
Payment Period & Credit
The stipulation by a business as to
when it should be paid for goods or
services supplied, for example, cash
with order, payment on delivery, or
within a particular number of days of the
Pricing should take into account
the following factors:
Fixed and variable costs.
Proposed positioning strategies.
Target group and willingness to pay.
Marketing Mix (4P’s)
Pricing is the only mix which generates a
turnover for the organisation. The remaining 3p’s
are the variable cost for the organisation.
It costs to produce and design a product, it
costs to distribute a product and costs to
Price must support these elements of the mix.
Pricing is difficult and must reflect supply and
Penetration pricing: Where the
organisation sets a low price to increase
sales and market share.
Skimming pricing: The organisation sets
an initial high price and then slowly lowers the
price to make the product available to a wider
market. The objective is to skim profits of the
market layer by layer.
Competition pricing: Setting a price in
comparison with competitors.
Product Line Pricing: Pricing different
products within the same product range at
different price points. An example would be a
video manufacturer offering different video
recorders with different features at different
Bundle Pricing: The organisation bundles a
group of products at a reduced price.
Psychological pricing: The seller here will
consider the psychology of price and the
positioning of price within the market place.
The seller will therefore charge 99p instead
£1 or $199 instead of $200.
Premium pricing: The price set is high to
reflect the exclusiveness of the product. An
example of products using this strategy would
be Harrods, first class airline services.
Optional pricing: The organisation sells
optional extras along with the product to
maximise its turnover. This strategy is used
commonly within the car industry.